EMC Labs September Report: Logical Analysis of BTCsh's Start, Operation, and End in This Cycle

Author: 0xWeilan

++The information, views, and judgments regarding markets, projects, and cryptocurrencies mentioned in this report are for reference only and do not constitute any investment advice.++

According to Coinbase quotes, BTC reached a four-year low of $15,460.00 per coin on November 21, 2022. We regard this day as the end of the previous cycle and the beginning of the current cycle.

From that day until September 30 of this year, BTC has been operating in turmoil for 1,044 days, nearing the peak of the previous two cycles (about 1,060 days after the low). If we calculate based on this, BTC is expected to reach the peak of the current cycle in October 2025.

5 Comparative Analysis of BTC Price Trends Across Cycles

The "cyclical law" of BTC originates from the speculative frenzy brought about by consensus diffusion and halving, and it remains the most valued cyclical indicator for traditional large holders of BTC. This group has played a decisive role in shaping the previous BTC peaks. It is the frenzied profit-taking and selling by this group that squeezes liquidity, ultimately leading the market to complete the formation of the cycle peak.

Currently, this group is intensifying its selling, and it appears that the "peak" is imminent. However, other peak indicators such as rapid price surges and sudden increases in new addresses have not yet appeared. This is puzzling: will this "cyclical law" continue to suppress the market and shape the cycle peak, or will it fail? Will the BTC bull market that started in November 2022 end in October?

In this report, EMC Labs uses its self-developed "BTC Cycle Multi-Factor Judgment Model" to conduct a comprehensive analysis of BTC price trends since the beginning of this cycle, clarifying which market forces and underlying logic have truly driven the cycle forward, and ultimately providing our analysis and judgment on whether BTC will peak in October.

Phase One (2022.11~2023.09): Accumulation by Long-Term Holders

Looking back at history, the bankruptcy of one of the main buyers in the previous cycle, FTX, and its lender Voyager Digital, marked the completion of the cycle's clearing. After the bankruptcy of FTX, the BTC price fell from the bottom range of $20,000 to $15,476 (Coinbase data, same below), with the lowest point occurring on November 21, 2024.

The bankruptcy of institutions like FTX intensified the market's bottoming, but the fundamental force determining the end of the cycle was the profit-taking and selling by long-term holders (long-term investors). During market euphoria, short-term traders rushed to buy while long-term holders sold; when the market cooled, short-term traders sold while long-term holders began to accumulate.

Statistics on Long-Term Holder Position Changes in the Previous Cycle

As in previous cycles, long-term holders began accumulating chips during the bear market phase of the last cycle. As the bottom phase approached, the scale of short-term losses began to decrease, and the buying power of long-term holders began to transform into upward price momentum, driving BTC and the crypto market away from the bottom and into a new cycle.

At the same time, the post-pandemic era saw the Federal Reserve's interest rate hike cycle nearing its end, officially concluding on July 26, 2023. Due to anticipatory trading, the Nasdaq Composite Index bottomed on October 13, 2022, and emerged from the bottom range in January 2023. The BTC price synchronized with this, leading by about 9 to 10 months before the official cessation of interest rate hikes.

As the interest rate hike cycle neared its end, tightening liquidity led to bankruptcy cases among regional banks in the U.S. (Silicon Valley Bank, First Republic Bank), forcing the U.S. government to urgently release liquidity. The U.S. M2/DXY index began to bottom and rebound, providing an external environment for the U.S. stock market and BTC to rebound from their lows.

U.S. M2/DXY

We define "2022.11~2023.09" as the first phase of the current cycle. Coupled with the improvement in macro liquidity, the tension created by the internal holding structure of the crypto market became the fundamental driving force behind the rise in BTC prices during this phase.

The Federal Reserve's interest rate hikes officially ended in July 2023, and the accumulation behavior of long-term holders continued until the end of September 2023.

At this time, the future-dominating DATs companies and BTC Spot ETFs had not yet become the leading forces, and the retail crowd chasing gains had not yet awakened. During this phase, the issuance of stablecoins was in a shrinking state, with funds still flowing out of the crypto market. The periodic accumulation by long-term holders was the main force driving the market upward.

In the first phase, BTC rebounded from a low of $15,476.00 to a high of $31,862.21, with a maximum increase of 105.88%.

Phase Two (2023.10~2024.03): BTC Spot ETF

U.S. inflation continued to decline, and the brief rebound in CPI from July to September 2023 was considered a false alarm, with July ultimately confirmed as the end month of the Federal Reserve's current interest rate hike cycle.

As market expectations changed, risk assets began to attract capital, and the shift in risk appetite prepared BTC for the initiation of the second phase of the market.

U.S. CPI

What truly drove BTC to initiate the second phase of the current cycle was the anticipation of the approval of BTC Spot ETFs and the fifth halving of BTC in April 2024.

Traditional Wall Street asset management giants like BlackRock and Fidelity submitted applications for BTC Spot ETFs to the SEC in June 2023, with speculative trading funds quietly gathering.

With the SEC's approval of BTC Spot ETFs on January 10, 2024, the second phase of the market can be divided into two halves: the first half (2023.10~2024.01.10) was dominated by speculative funds betting on ETF approvals, while the second half (2024.01.10~2024.03.14) was led by incremental funds (over $12 billion) brought in by the ETF channel.

Monthly Statistics of BTC Spot ETF and Stablecoin Channel Fund Flows

Additionally, the stablecoin channel completely broke free from the outflow trend in October, restoring inflows, and by the end of March, a total of over $26 billion was newly issued, becoming one of the main driving forces in the first half.

Since the initiation of this phase in October 2024, long-term holders began to reduce their holdings, with the scale of reduction reaching as much as 900,000 coins by the end of the market.

The market during this phase was jointly dominated by speculative/investment funds from the BTC Spot ETF channel, on-site speculative/investment funds (manifested as a large issuance of stablecoins), and long-term holder reductions. Buying power exceeded selling power, leading to a significant upward movement in BTC prices, with the market being very vigorous.

In the second phase, BTC rose from a low of $26,955.25 to a high of $73,835.57, with a maximum increase of 173.92%.

Phase Three (2024.04~2024.09): Halving Rebalancing

In the analysis of the second phase, we pointed out that the investment/speculative funds based on the traditional narrative of BTC halving were also important factors determining market movements. This was clearly reflected in the market of the third phase.

On April 19, 2024, BTC completed its fourth halving, reducing the block reward from 6.25 BTC to 3.125 BTC. Although over 95% of BTC has already entered circulation, the impact of halving on the actual supply of the market has significantly decreased, but the speculative market surrounding halving indeed overdrew BTC's upward space. From April 2024 to September, BTC entered a prolonged period of consolidation lasting seven months.

From the funding statistics, it can be seen that after BTC reached a phase high in March, the inflow of funds through the BTC Spot ETF channel shrank but remained at a high level, while the stablecoin channel saw an even greater contraction, even turning into outflows at one point.

Monthly Statistics of BTC Spot ETF and Stablecoin Channel Fund Flows

During this period, although the Federal Reserve had stopped raising interest rates, rate cuts had not yet started, and the inflow of funds through the ETF channel significantly decreased. Coupled with the exit of on-site funds as halving approached, the overdrawn market had to revise downward, seeking a new price balance.

The market was able to rebalance without falling into a bear market, thanks to the stabilizing force from long-term holders. We noted that after entering April, as liquidity receded, long-term holders stopped reducing their holdings and began accumulating again after July. The behavior of long-term holders aligned with the historical characteristics of this group, outlining a phase bottom for the market.

In the third phase, the highest price was $109,588, the lowest price was $74,508, with a maximum decline of 32.01%, which did not exceed the BTC bull market correction threshold.

Phase Four (2024.10~2025.01): Trump's Crypto-Friendly Policies

Since the cessation of interest rate cuts in July 2023, the federal rate has remained high at 5.25~5.50 to suppress CPI decline. High interest rates gradually harmed the job market, and the Federal Reserve finally restarted rate cuts in the September 2024 meeting, completing a 75 basis point cut by the end of the year.

The rate cuts boosted overall market risk appetite, with funds flooding into the crypto market through BTC Spot ETFs and stablecoin channels. By the end of January 2025, the management scale of 11 BTC Spot ETFs in the U.S. exceeded $100 billion, setting multiple historical records. This indicates that the narrative of BTC as "digital gold" has gained favor on Wall Street, and BTC is transitioning from an alternative asset to a mainstream asset.

In addition to rate cuts, another catalyst for BTC's rise was the U.S. presidential election. In this election, Republican candidate Donald John Trump underwent a 180-degree shift in his attitude toward cryptocurrencies, becoming the most "crypto-friendly" presidential candidate in the U.S. His family business even issued a MEME token called Trump after his victory.

After taking office, Trump signed executive orders supporting digital assets and blockchain technology, established a cross-departmental working group to review existing regulatory policies, announced the establishment of a "Bitcoin Strategic Reserve" and "U.S. Digital Asset Reserve," and signed the "GENIUS Act" to promote the compliant development of stablecoins. Additionally, he appointed "crypto-friendly" individuals as Treasury Secretary and SEC Chairman, effectively promoting the development of crypto assets and blockchain technology in the U.S. The friendliness of his attitude and the density of policies are unprecedented, even Satoshi Nakamoto would find it hard to believe.

With Trump's campaign, massive funds rapidly flowed into the crypto market through ETFs and stablecoin channels, forming the largest scale of capital inflow in this cycle to date. Meanwhile, long-term holders began to sell again to lock in profits.

On-Chain Value Realization Statistics of Bitcoin Network

Driven by the U.S. crypto-friendly policies, crypto assets gradually became mainstream assets in the U.S. In addition to BTC Spot ETFs, dozens of DATs companies represented by Strategy joined the competition to accumulate BTC and other crypto assets. These two groups have become the largest buyers in the BTC market.

BTC held by BTC Spot ETFs and DATs companies has exceeded or approached 5%.

With the large-scale involvement of BTC Spot ETFs and DATs companies, BTC entered a major turnover era. A significant amount of BTC is shifting from early holders to the custody accounts of BTC Spot ETFs and DATs companies. This has caused the BTC held by centralized exchanges, commonly used by early crypto holders, to begin to decline significantly. By the end of September 2025, over 400,000 BTC had flowed out of the management addresses of centralized exchanges, valued at over $40 billion at $100,000 each.

Stock Statistics of Major Crypto Asset Exchanges for BTC

In this phase and beyond, this outflow continues, indicating that BTC is currently undergoing a historic turnover. Early investors (including those holding for over seven years) are cashing out substantial profits, while traditional funds are transitioning into long-term investors of this asset. The behavior of early investors is heavily influenced by the halving cycle, while DATs companies seem inclined to continue buying for long-term holding, and the behavior of BTC Spot ETF holders is more influenced by the performance of the U.S. stock market.

This change in holding structure complicates the cyclical shaping of BTC.

The market dynamics during this period stem from the speculative behavior driven by expectations of rate cuts and Trump's crypto-friendly policies, resulting in record capital inflows into the crypto market.

In the fourth phase, BTC prices rose from a low of $63,301.25 to $109,358.01 (recorded on January 20, 2025, the day Trump took office), with a maximum increase of 72.76%.

Phase Five (2025.02~2025.04): Black Swan

In our research framework, the fifth phase is characterized by a mid-term adjustment formed by external black swan events combined with a return of emotions after passionate speculation. The market turbulence caused by the pause in rate cuts and the tariff war reached thresholds both temporally and spatially, ultimately forming this special phase.

Monthly Statistics of Capital Flows in the Crypto Market

Because the U.S. stock and crypto markets had priced in the continuation of rate cuts sufficiently, when the Federal Reserve stopped cutting rates in January 2025 and refocused on its mission to reduce inflation, the historically high U.S. stock market and BTC entered an unpredictable state. When Trump announced a tariff rate far exceeding expectations, the market plunged into a crash mode.

The Nasdaq experienced a maximum adjustment of nearly 17% from its peak, while BTC saw a maximum adjustment of 32%. Although BTC's decline was significant, it did not exceed the correction threshold during a bull market.

Ultimately, as the panic triggered by the tariff war and concerns about a hard landing for the U.S. economy subsided, both the U.S. stock and crypto markets achieved a V-shaped reversal in April, continuously reaching new historical highs after July.

Behind the V-shaped reversal, DATs companies, BTC Spot ETF channels, and stablecoin channels surged with buying power. Additionally, long-term holders timely returned to accumulation after the decline, once again acting as a stabilizing force in the market.

In the fifth phase, the highest price was $73,777, the lowest price was $49,000, with a maximum decline of 33.58%, which did not exceed the scale of BTC bull market corrections.

Phase Six (2025.05~): Old Cycle and New Cycle

The market crash caused by the black swan was gradually recovered by bottom-fishing funds and long-term accumulation, and by July, BTC had reached a historical high of $123,000.

At this point, long-term holders initiated the third major sell-off of this cycle, which continues to this day. The receiving parties are the funds from DATs and BTC Spot ETF channels.

Before the rate cut in September, anticipatory trading continued to dominate the market, with significant capital inflows from July to September, but the inflow scale decreased, leading to a slight adjustment in BTC after the rate cut. Long-term reductions became the main activity affecting market movements.

Statistics on Long-Term Holder Position Changes in BTC

Since the third wave of increases in this cycle, long-term holders have been conducting a third round of large-scale sell-offs. According to on-chain data, long-term holders have locked in profits of over 3.5 million BTC in this cycle, reaching the threshold seen in previous cycle peaks. As of today, long-term holders continue to sell BTC significantly.

Statistics on Profits Realized by Long-Term Holders (BTC)

In the past BTC halving cycles, BTC halving and the accumulation and distribution of chips by long-term holders have been decisive factors in shaping the cycles, while the speculative sentiment surrounding halving that drives new investors to enter is a necessary condition for forming cycle peaks. In previous cycles, this speculative influx of new participants manifested as a surge in new addresses for Bitcoin network wallets.

However, with the diffusion of BTC consensus, the scale of new addresses created in each cycle has stagnated. Since 2024, the number of new BTC addresses has dropped to levels seen during previous bear markets. Of course, this cannot simply be interpreted as a decrease in new participants, as after the approval of 11 BTC Spot ETFs in the U.S. in January 2024, many investors began to participate through ETF channels, significantly reducing the creation of BTC wallet addresses.

Statistics on New Addresses for Bitcoin Network

However, when observing the largest SCP platform, Ethereum, we can notice a similar situation in the number of new addresses created during this cycle.

Statistics on New Addresses for Ethereum

This leads us to believe that the structure of the BTC market has undergone a dramatic change, and the entire crypto market is entering a new stage of development. Simply predicting market peaks based on cyclical laws or thoughtlessly buying coins in pursuit of hot trends in hopes of high returns has become outdated.

BTC may have already exited the old cycle and entered a new cycle, with its peak formation methods, peak timing, and bear market correction amplitudes likely undergoing a complete transformation.

Conclusion

From the above review and observations, we draw a preliminary conclusion: the upward momentum of this bull market primarily stems from the impetus of industrial policies and incremental funds from traditional channels. Halving and industrial innovations have not brought in massive capital inflows as in the past, thus failing to trigger a comprehensive bull market in the crypto market where all coins soar.

Although during this bull market, the industry has also seen innovations in subfields such as Ethereum Layer 2, BTC Ordinals, Restaking, Solana revival, and DePhin, these innovations have attracted only pulse-like and extremely limited capital compared to the previous ICO and DeFi frenzy.

This has resulted in the prices of most coins and tokens in the crypto market experiencing only pulse-like phase increases since BTC restarted its new cycle bull market in November 2022, with even the most consensus-driven and widely used SCP platform token, ETH, once falling back to the pre-bull market starting point in 2025.

BTC is transitioning from the old cycle to the new cycle, with funds from DATs companies and BTC Spot ETF channels attempting to reshape the logic and form of the cycle under the influence of market sentiment and their own logic. However, the BTC long-term holder group, which has played a decisive role in cyclical movements over the past 16 years, still holds over 15 million BTC, accounting for more than 70% of the issued BTC, and this group continues to act according to cyclical laws.

Factors supporting the notion that we have not yet seen a peak or have entered a new cycle include: the outstanding fundraising capabilities and long-term holding strategies of DATs companies, the ongoing introduction and implementation of crypto-friendly policies in the U.S., and the trend of high-risk asset allocation triggered by the restart of the rate cut cycle.

Will long-term holders sell off to squeeze liquidity and complete the formation of the old cycle peak, or will buying power in a rate cut environment bury selling pressure and follow the U.S. stock market into a long bull new cycle? This game is still ongoing.

We tend to believe that the cycle will be appropriately extended, and that BTC peaking in October remains a low-probability event. However, if long-term holders persist in continuous selling, it is highly probable that the bull market will end this year. The time and space for bear market adjustments after the bull market may also be significantly reduced, depending on the behavior of new buyers.

The end has already begun.

EMC Labs (Emerging Reality Labs) was founded in April 2023 by crypto asset investors and data scientists. It focuses on blockchain industry research and investments in the crypto secondary market, with industry foresight, insights, and data mining as core competencies, aiming to participate in the thriving blockchain industry through research and investment, promoting blockchain and crypto assets to bring benefits to humanity.